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Economics/Basic accesibility of a product


Hello, I have a very simple question.  There has been a collectible toy on the market for about 10 years, with only originals in circulation.  The price was stagnant for quite a while.  Recently, the toy manufacturer re-released the product in a small limited run.  Since then, the demand for the product has gone up, and so has the price.  I have no physical evidence, but a general consensus is that more people want this item now than before, and it seems that demand keeps rising as the item gains in popularity even after the second limited run has long been over.  Would it be safe to assume that the accessibility of this item has decreased even though there is are physically more of the item in circulation?

Accessibility-Embodied Veblen Good
Hi Joshua,
Although you have not clearly mentioned what particular type of toy you are seeking the answer about, I take it that it is just a simple, non-mechanical, non-contraption toy made of simple yet genuine materials which is so designed as to attract choosy customers who place emotional value to mementos or souvenirs. This I assume on the basis of the tenor of your arguments regarding the simultaneous shift in demand and the rise in price. If you have any other view about the type of product, then the hypothesis you have set out may not turn out tenable. Write to me if you think otherwise.


First, this is not an ordinary, normal good. For a normal good will not register any increase in demand owing to a rise in price. The demand curve is downward sloping, delineating a movement along the demand curve from the northwest to southeast, riding on an inverse relationship between price and quantity demanded.

Second, this is not a necessity item, in which case the demand curve is like that of the normal good or in extreme case a vertical line in the positive quadrant of price-quantity plane.

Third, this is not a Giffen good, in which case when price falls, demand also falls, giving the demand curve a positive slope.

Finally, we are left with one type of good that has also a positively sloped demand curve like that of the Giffen good. The difference is, here price is going up and the demand for the product is also going up. This, I would consider, comes under the purview of Veblen good.

Veblen good is that type of good the quantity demanded for which goes up when price increases. It so happens that if the price is much too low in consumers' perception, the demand for the product pesters at a very low level. American economist Veblen found out that, bitten by the bug of snob-appeal, a small section of people with predilection for showoff or certain unaccountable idiosyncrasy has a tendency to shy away from a product which, by virtue of the outward tag of price, does not appeal to them as of status value they crave to maintain. This is also finely alluded to by J. K. Galbraith in his best-selling magnum opus "Affluent Society."

Gucci would have lived and died poor as an ordinary janitor in a foreign country had it not occurred to him that the fashionable vanity bags high-society ladies were carrying were nothing but made of ordinary leather but with the mark of high society. He hit on the idea, brought leather bags, and started selling at high prices. The same way customers were attracted to by clothes at higher prices from Pierre Cardin while frowning upon similar clothes meant for poorer sections and sold at lower prices.

The point is, when two more or less identical products with different price tags are placed to a particular type of customer who believes in exclusiveness yet cannot exactly differentiate the putative qualitative differences, may easily be tempted to go in for the product with a higher price tag. Needless to mention, most customers may choose the product with lower price tag.

These are the products people buy more because of attachment to emotional values than because of usefulness. They try to attach values to the products. Should that be perceived to have very low price, the buyer may flinch from purchasing the product. So the product, though not exactly a product emanating from snob-appeal, has more or less identical "evocative response."

Collectible toy, having the characteristics expounded above, may lie in the low plateau of demand if the price attached to it fails to evoke response from customers who, for obvious reasons of their being unable to dichotomize values between high value and low value of two identical products, take price as the determinant of quality.

This is exactly what happened. The collectible toy was gathering dust on shelves of retail stores as the low price did not sufficiently attract the relevant customers. Then, as if by a magic of microeconomics, the sellers discovered the raison d'괲e behind the "shift" in supply. The parameter of "collectible property" embedded into the demand function triggered a shift in tandem in the demand schedule, which indeed was upward-sloping due to features explained above.
The upshot of that was that both the supply curve and the demand curve became upward-sloping. The supply curve that shifted upward and to the left intersected the demand curve at a point where the coordinate showed "high price, high demand" when in fact supply is "constricted."

This is shown in the attachment. Poring over this diagram will give you more insight than reading reams of paper, I believe with Samuelson.

For further reference, if you are comfortable with advanced mathematics, look up "Comparative Statics and the Stability of Equilibrium (The Cobweb Model)" in "Microeconomics" by R. Robert Russell and Maurice Wilkinson. They give a beautiful presentation with upward-sloping supply curve and upward-sloping demand curve: geometry is simple, but it presupposes knowledge difference and differential equations. If you are at this stage of your academic studies not that much comfortable with math, don't worry much. You won't lose much --I have reproduced an adapted version of their model in an easily understandable attachment.  

I hope, Joshua, I carry my explanation across to you as clearly as possible. Best.  


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Eklimur Raza


It appears some students in this website are confused about elasticity of demand and the slope of the demand curve when they are trying to figure out why rectangular hyperbola comes up in case of unitary demand curve. First, they don't know that RH can be depicted in a positive quadrant of price,quantity plane. Secondly, they make the mistake that the slope of RH is constant at -1. Two points could help them: first, e=1 at each and every point of the RH, because the tangent at any point shows lower segment=upper segment (another geometric definition of e); yet slopes at different points,dQ/dP, are different; second, e is not slope but [(Slope)(P/Q)]in absolute terms. Caveat: only if we measure (log P) along the horizontal axis and (log Q) up the vertical axis, can we then say slope equals elasticity --in which case RH on P,Q plane is transformed into a straight-line demand curve [with slope= -tan 45 deg] on (log Q),(logP) plane, and e= -d(log Q)/d(log P). [By the way, logs are not used in college textbooks --although that is helpful in econometric estimation of elasticity viewed as an exponent of P, when demand equation is transformed into log-linear form.] I have not found the geometrical explanation I have given in any textbook followed in undergraduate and college classes in Canada (including the book followed in a university where I taught for a short time and in the book followed in George Brown College, Toronto, where I teach.


About 11 years' teaching economics and business studies, and also English, history and elementary French.Practical experience in a development bank, working with international donor agencies like the World Bank and the ADB. Experience in free-lance journalism, including Canada's "National Post."

I teach micro- and macroeconomics at George Brown College (continuing education), Toronto, ON, Canada.

Many articles and editorials, on different subjects, in English newspapers. Recently an applied Major Research Paper, based on a synthesis of the Solow growth model and the Lewis two-sector model, has be accepted by Ryerson University, Toronto. Professors Thomas Barbiero and Eric Cam, Ryerson University, accepted the paper.

Master degree in Interantional Economics and Finance and diploma with honours in Business Administration from Canada.

Awards and Honors
Received First Prize in an inter-university Literary Contest.

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